Shirani Bandaranayake, the first woman to hold the office of top judge, had issued several decisions at odds with the government. Rajapakse dismissed her after a closed-door meeting with other judges on Saturday, according to a presidential spokesman.
The move came despite mounting calls on the president to halt the impeachment, which is seen by rights groups and Western nations as a blow to judicial independence in a country just emerging from decades of ethnic war.
Parliament voted on Friday to approve an impeachment report that last week had been quashed by the country's highest courts, which ruled that the process was unconstitutional. The United States and Britain expressed deep concern at the vote.
"The president this morning signed the letter removing Shirani Bandaranayake from the office of chief justice," Rajapakse's spokesman Mohan Samaranayake told AFP. "The letter was hand-delivered to her by a secretary accompanied by presidential security staff."
The Commonwealth had asked Rajapakse on Saturday to reflect on the "constitutional and other ramifications" at a time when Sri Lanka is preparing to host the 54-member group's next summit later this year.
A spokesman for Bandaranayake confirmed that she received the letter sacking her on Sunday, but declined comment. No replacement has been named by the government.
Sri Lanka's Sunday Times newspaper said Rajapakse had offered to allow Bandaranayake to retire and so avoid impeachment during a meeting Saturday with other supreme court judges, but a source close to her told AFP that she was not amenable.
Rajapakse's spokesman would not comment on what was discussed in Saturday's meeting.
The ruling party initially framed 14 charges of financial, professional and personal misconduct against Bandaranayake, but later cleared her of financial wrongdoing and convicted her only on three counts of misconduct.
Legislators had found her guilty of tampering with a case involving a company from which her sister had bought an apartment, of failing to declare dormant bank accounts, and of staying in office while her husband faced a bribery charge.
Bandaranayake walked out of a parliamentary select committee hearing last month after accusing government legislators of verbally abusing her and not giving her a fair trial. She has denied all the allegations against her.
The government launched the impeachment process in November after a spate of supreme court decisions went against the administration of Rajapakse, who has tightened his hold on power after crushing Tamil Tiger rebels in May 2009 following a long civil war.
Among other rulings, Bandaranayake stalled a bill that sought to grant greater political and financial power to the president's youngest brother Basil, who is the economic development minister.
Privately run newspapers in Sri Lanka on Sunday had urged Rajapakse to reconsider and avoid a constitutional crisis.
"In the coming week, what stands between possible constitutional anarchy and the rule of law is the intervention of the president," the Sunday Times said in an editorial.
The Sunday Island said the chief justice was not given a fair hearing and the impeachment had only "blackened" the country's image.
Work in courts has been at a standstill since Thursday as lawyers stay away in protest at the impeachment. They have also asked other judges not to recognise any replacement appointed by the president.
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Can this happen in Pakistan?